Do you remember being a kid and collecting a handful of pennies to shove in your itty bitty pocket and how it was the coolest! And how many times did you carefully take it out of your pocket to count it again and again and again? “I got six pennies! Six!(or as most kids call them ‘monies’).” Now, in 2008, reaching in your pocket and coming up with six pennies is hardly a time to shout with glee. The exciting discovery that was shouted out now becomes a question…”Six pennies?…That’s it?” But what makes this even matter? Why couldn’t I be just as excited to have a handful of buttons…I have a ton of those (not kidding….I really do). The reason is simple, money is our form of exchange. The more there is to exchange the more one gets in return. This is what drives the thinkers, doers, inventors, laborers, etc….This is what makes our society work. Alan Greenspan defines it cleary here:

The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.

Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange.

And ironically the article also goes on to explain loans and banking. It is exactly what is going on now with our economic crisis and banking bailouts. (I bolded the important part):

Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one-so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the “easy money” country, inducing tighter credit standards and a return to competitively higher interest rates again.

Wait……..yep, that is what is ruining our economy this very day. This doesn’t make Greenspan a psychic predictor of our future, it doesn’t make him a really good guesser….No, it is a fact that when money is used to a liberal degree the economic balance becomes unstable and falls. Seeing the truth in economics is one of the reasons I consider myself a “mug.”

Are You A MUG or A WUMP???
Mugwump - A term originally coined for those who were “on the fence” when it came to politics. This blog redefines the word based on my own collaboration and what I think the word MugWump should mean. A political term representing both sides of the fence.
I consider myself both a “mug” and a “wump”. A “supply sided” economic thinker with broad-minded generosity. So, are you just a "mug" or just a "wump", or a "MugWump."
"I GOT MY 'MUG' ON ONE SIDE AND MY'WUMP' ON THE OTHER."